Exploiting Iran's vulnerability


Iran’s vulnerability concerning gasoline, and its lack of capacity to refine crude oil has been well known. Thus, it should not have been a surprise when a gasoline crisis inside Iran finally exploded. This story from the International Herald Tribune describes the Iranian mob’s response: many burning fuel stations, banks and businesses under attack, and dozens of arrests two days after the Iranian government imposed gasoline rationing on consumers. What remains to be seen is whether Iran’s angry masses will follow through on their protests, and what measures the internal security services will take to suppress the angry gasoline protestors.

In spite of abundant crude oil reserves, Iran’s capacity to refine crude oil has deteriorated due to a lack of investment and poor economic policies. The regime has discouraged foreign investment partnerships in the oil sector. As is common in the region, the government has set the retail gasoline price at a ridiculously low level. Finally, a growing population has expanded retail demand. The result has been predictable, the only question being the timing.

An additional factor hinted at by the Iranian government may be the regime’s possible preparations for open warfare. The Iranian armed forces may be building up fuel stockpiles in anticipation of action against the U.S. Navy and Air Force, thus removing more refined products from the consumer market.

Having thus seen a vulnerable nerve, a surprising bipartisan group of U.S. congressmen wants to press that nerve and inflict more pain on Iran, as this story from the Washington Post explains:

Under the proposed legislation, any company that provides Iran with gasoline or helps it import gasoline after the end of the year could lose its access to U.S. customers.

The State Department has been an unenthusiastic observer of maneuvers such as these. Many of the State Department’s strategists argue that explicitly cutting Iran off from commercial contact with America’s allies will force the Iranian regime completely into the arms of the Chinese and Russians. The result, these strategists argue, would be to enhance the Chinese and Russian bargaining positions, while reducing the West’s leverage. The State Department would prefer to negotiate a consensus sanctions strategy against Iran, a sanctions accord that unifies all of the major powers.

Since the Iranians are playing the diplomats for time, it is ironic that they are so eager to make them a gift of time to develop nuclear weapons. I think they may be miscalculating the support Iran would get from China and Russia. The Russians appear to be backing away from Iran at this point and the Chinese are looking for all the gas they can get for themselves.


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